CoStar stock price target cut to $87 by Needham

Wednesday, Needham analysts lowered the price target on CoStar Group (NASDAQ:CSGP) shares to $87 from $100 while maintaining a Buy rating. The adjustment follows the company’s fourth-quarter results, which surpassed Street expectations, driven by strong performance in key business segments such as CoStar Suite and Multifamily, as well as gains from selling, general, and administrative (SG&A) leverage.

Despite the favorable quarterly outcome, CoStar’s guidance for the first quarter and the full year of 2025 was less optimistic. This cautious outlook is attributed to weaker booking quarters in 2024, which are expected to impact growth in 2025, compounded by ongoing challenges in the commercial real estate (CRE) market. InvestingPro analysis indicates the stock is currently trading above its Fair Value, with analyst targets ranging from $63 to $100.

In response to these challenges, CoStar Group plans to expand its sales force by 35% in the fiscal year 2025, aiming to promote long-term growth. This expansion, alongside continued investments in Homes.com, is anticipated to pressure profit margins in the short term. However, the analyst expressed confidence in the company’s management and their ability to achieve long-term profitable growth. The expectation is that CoStar’s performance will improve once the operating conditions stabilize.

The analyst’s statement highlighted that while the initial outlook for fiscal year 2025 is less than ideal, the long-term growth prospects remain intact. Needham’s revised price target reflects these near-term headwinds, yet the firm’s Buy rating indicates a belief in CoStar’s future potential.

In other recent news, CoStar Group reported its fourth-quarter earnings, revealing adjusted earnings per share of $0.15, which fell short of the analyst estimates of $0.22. Revenue for the quarter was $709 million, slightly surpassing the consensus forecast of $698.89 million and marking an 11% increase year-over-year. For the full year 2024, CoStar Group’s revenue reached $2.74 billion, also an 11% increase from the previous year, although net income declined to $139 million from $375 million. Looking forward, the company provided guidance for 2025 with a revenue forecast between $2.985 billion and $3.015 billion, which is below the analyst expectations of $3.084 billion.

Citi analyst Peter Christiansen adjusted CoStar’s price target to $86 from $88, maintaining a Buy rating, while Citizens JMP analyst Nicholas Jones reduced the target to $85 from $90, retaining a Market Outperform rating. Despite the recent earnings miss, analysts highlighted CoStar’s commitment to expanding its sales force, which is expected to enhance revenue growth in its core segments. The company’s strategy includes a focus on salesforce additions for fiscal year 2025, particularly in the Apartments segment. Additionally, CoStar’s Board of Directors approved a $500 million stock repurchase program, which has no time limit and can be discontinued at any time.

This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.